Builders Don’t Raise Prices at Whim

A property developer has lashed out at the National House Buyers Association (HBA) for implying that builders were raising prices deliberately and for no good reason.

Anthony Adam Cho, a former chairman of the Melaka Real Estate and Housing Developers Association, said it was senseless for anyone to say that developers were intentionally setting prices that were beyond the reach of the market.

"That would be suicide" he said.

He was responding to an HBA statement that developers were raising their prices "way in excessâ€ of increases in the prices of raw materials and labour.

Cho told FMT property prices were determined by a combination of market forces and regulatory costs.

"If the market demands certain types of homes, we will produce and sell them" he said. "If we don't produce what people want, then our properties don't sell. If we don't sell our houses, we'll lose money. It's as simple as that.â€

Cho said the main reason property prices were high, particularly in urban areas, was that land prices were high.

This was why affordable homes couldn't be built in urban centres, he added.

He said it would be different if the authorities were to provide land on which developers could build such homes, but he noted that even the authorities didn't have much land in city areas. He alleged that this was the result of poor town planning.

He pointed out that in Singapore, the government would build affordable housing around public facilities, including MRT and LRT stations, schools, neighbourhood malls and recreational parks.

But in Malaysia, he said, lands around public transport hubs were usually owned by private companies and that was why affordable homes ended up being developed away from city centres.

Cho also spoke of cost increases resulting from the imposition of a host of requirements and levies by various authorities. One of these is the requirement to build affordable homes, which, according to him, often had to be sold for much less than the cost of building them. This had forced developers to increase the prices of other kinds of housing, he added.

Developers are also required to install the last mile of connections to telecommunication systems and electricity and water supplies, and Cho complained that this was unfair.
He said the foreign worker levy to be introduced next year would also have an effect on prices.

He also spoke of a "false demandâ€ for property in urban areas, saying many affluent people who already had houses elsewhere would purchase or rent properties closer to city centres in order to reduce their travel time.

"Once we have more infrastructure that can bring people from outside the city into the city at a faster pace, you'll see demand for housing spreading more evenly rather than concentrated in city centres" he said.

SIGN UP NEWSLETTER

Monthly Column

The staple of your property-related materials. It's all about being ahead of the game and with The Column, you get carefully selected information that will keep you informed and running with the pack. The best news, articles and properties on the market from the Property Hunter portal, conveniently wrapped and ready, just for you.